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Loretto Man Pleads Guilty To Lying About Employees’ Wages

MINNEAPOLIS—Today in federal court, a 52-year-old Loretto man pleaded guilty to felony false statements in connection with prevailing wage violations. Jeffrey John Plzak was charged on June 17, 2014, and entered his plea this morning in Minneapolis before United States District Court Judge Patrick J. Schiltz.

As set forth in the plea agreement, Plzak and his spouse run Honda Electric, Inc., a company based in Loretto, Minnesota. Honda Electric bids on construction projects, including highway and road projects, that are federally and state funded. Many of the projects Plzak bid on required that Honda Electric pay its electricians and other laborers the prevailing wage rate.

On numerous occasions, Plzak won bids based in part on the representation that Honda Electric employees working on the project would receive prevailing wage. Those projects required periodic submission by Honda Electric of a certified payroll report. In those reports, Plzak knew Honda Electric, at his direction, was representing to the United States Department of Transportation – Federal Highway Administration and to the Minnesota Department of Transportation that Honda Electric’s employees were being paid the required prevailing wage.

In fact, as Plzak knew, in many instances employees were being paid less than half of the prevailing wage rate. In total, Plzak admitted that over a series of projects between 2010 and 2013, Honda Electric underpaid its employees over $271,000.

For example, Plzak admitted that in a certified payroll report dated September 24, 2010, Honda Electric stated it was paying prevailing wage on a federally funded project in Ramsey County, when, in fact, he knew the employees were receiving far less than prevailing wage.

“When contractors lie about paying prevailing wage, workers, competitors, and taxpayers all lose,” said United States Attorney Andrew M. Luger. “Workers are underpaid, competitors who played by the rules are underbid, and the wrongdoer makes off with taxpayer dollars meant for honest employers. We thank the outstanding work done by the Minnesota Department of Transportation and the FBI in investigating these and other prevailing wage violations.”

As a result of his plea, Plzak faces up to five years in prison, repayment of unpaid wages, and a fine of up to $250,000 or twice the loss amount, whichever is greater. Plzak will be sentenced at a later date.

This case is the result of an investigation by the Minnesota Department of Transportation’s Labor Compliance Unit and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney David M. Genrich.